Which are examples of perils relevant to property insurance?

• A. Fire, theft, windstorm
• B. Flood, earthquake, wear and tear
• C. Market risk, credit risk, liquidity
• D. Inflation, currency exchange, interest rate

Answer: (A)

In property insurance, a peril is a specific event that can cause direct physical loss to the insured property. Fire, theft, and windstorm are classic examples because they are common, tangible events that can damage or destroy property and are typically covered under standard property policies. The other options mix risks that aren’t considered standard perils: wear and tear is usually excluded as an ordinary wear and aging loss; flood or earthquake can be perils but are often excluded from standard coverage and require riders or separate policies; and market risk, credit risk, liquidity, or macroeconomic factors like inflation and currency changes are financial risks, not physical hazards to property. So fire, theft, and windstorm best represent the perils relevant to property insurance.